Morning Observations

1) We spoke yesterday about how low the expectations are for retail sales reports coming out at the end of the week.

Today, the International Council of Shopping Centers is lowering their Sept growth estimate to about 2% from an original target range of 2-2.5%, the slowest gain since April. Problems? First, there's the weather -- unseasonably warm. Second, comps are tough. Third, the Street believes that economic weakness may still be accelerating and spilling over to the consumer, despite the strong jobs report.

2) Want to see what global growth really looks like? Look at restaurant giant YUM (Taco Bell, Pizza Hut, KFC). Worldwide growth of 4%, 11% in China, only 1% in U.S. Also announced $1.25 b buyback. Oh, and also beat earnings estimates for Q3 and guided slightly higher for the full year. Stock at new high.

3) Standard & Poors David Wyss says that the US subprime crisis will not peak until 2009.

4) Speaking of subprime -- several bills are advancing in Congress to address the potential mortgage foreclosure crises. According to Stanford Group, the House Judiciary subcommittee has cleared Chapter 13 relief for home mortgages; similar bills are in the Senate. Lenders are mounting full-scale attack as the bills threaten to disrupt mortgage market and boost credit costs, according to Stanford.